" class="no-js "lang="en-US"> The New Blueprint for the Bank of the Future
Tuesday, May 21, 2024

The New Blueprint for the Bank of the Future

by Madhur Jain, Executive Vice President – Solution Consulting SaaS, SunTec Business Solutions

What will the bank of the future look like?

Will it be straight out of a science fiction movie with Artificial Intelligence (AI) powered bots and Augmented Reality (AR) tellers? Or will physical bank branches cease to exist, and be replaced by online models? Realistically speaking, given the speed at which business paradigms, consumer behavior, and technology are evolving one cannot accurately define the ‘bank of the future’ as this definition will only evolve with time.

But there is no doubt that in the future technology will be deeply enmeshed with most aspects of human life including banking. We are already witnessing significant changes in the way banks function and this trend is only going to intensify, ushering in a new era of banking that is deeply in sync and integrated with the customer’s life. And banks will have to harness new emerging technologies to meet the requirements of customers in a highly digitized world. One thing is for sure, when it comes to transformation, banks will have to move from being reactive to market changes to proactively taking steps to disrupt the market to their advantage.

And so, they will need to be agile, adaptable, and scalable to quickly roll out offerings that are truly customer centric and personalized to meet the unique needs of each customer.

The Factors Driving Banking Transformation

The emergence of new technologies has changed the way customers engage with most services, ranging from retail and entertainment to transport. Customers have begun demanding the same level of on-demand personalization from their banks. At the same time, fintechs and tech giants have entered the banking sector, offering customers the hyper-personalized and innovative services and engagement they seek. And unlike older customers, the new generation of banking customers are not hesitant to move their business if their requirements are not met.

The post-pandemic world is now facing geopolitical tensions that are impacting critical sectors like energy, food supplies, and resulting in a possible recession, rising inflation, and widespread job losses. Central banks across nations are hiking interest rates in a bid to combat these factors. There is increased regulatory scrutiny on banks as well. Growing revenues and building long-lasting customer relationships under these circumstances require a sweeping transformation of the business of banking.

Reimagining Banking with a Focus on Customer Centricity

“The bank of the future will also need to be able to orchestrate and manage multi-partner ecosystems and collect and analyze data from across this ecosystem and across touchpoints.”

Evidently, if the traditional banking sector must weather this storm, it must completely overhaul its processes, strategies, and models to put the customer at the heart of everything they do. Open banking and Banking-as-a-Service (BaaS) models are already enabling banks to work with non-banking entities and fintechs to provide a range of services to a new client demographic.

90 percent of organizations are already utilizing APIs to generate revenues from existing customers and three quarters of these say that they intend to leverage APIs to tap into new customer segments with innovative offerings. There is already a significant regulatory push for adopting open banking models and the market is expected to reach USD 135.17 billion by 2030, growing at a CAGR or 27.2 percent between 2023 to 2030.

The question is, will BaaS and open banking continue to shape the future of the sector? It is safe to say that in the future banks will have to work at proactively driving innovative and value-driven transformation within the sector. And they will need to integrate with the customer’s digitized life to offer seamless access to contextual products and services. To achieve this, they must work with a network of partners who can help them meet the customer lifecycle needs.

A Collaborative Financial Lifestyle Platform

The bank of the future is not likely to be a standalone entity as it is today. Banking will need to be embedded into the customer’s everyday life. And so, the bank of the future needs to be a ‘financial lifestyle platform’, occupying a central place in the daily life of the customer, not merely a supporting role. From offering hyper-personalized pricing and offers to a range of related services that meet all their needs, banks of the future will put the customer and their requirements at the heart of their strategies. The bank of the future will be founded on partnerships and will drive convergence across industries with non-finance offerings embedded within their offerings and vice versa. It will integrate various services including travel, telecom, shopping, healthcare, and education within the banking ecosystem. Understandably, such an ecosystem calls for significant collaboration and effective management of partnerships.

Technology, the Core of the Banking Ecosystem

Technology is evolving at an unprecedented pace and trends impacting business and life are also changing rapidly. Just a few years ago the buzz in the banking sector was about robotic advisory, and then generative AI entered the scene and changed the conversation entirely. From where we are today, it may be difficult to accurately predict the exact problems and needs of tomorrow and the technologies that will shape banking in the future. But banks must be ready to adapt to any new transformative technology that emerges. To do this they must envision beyond incremental improvements. For instance, Netflix reshaped entertainment by reimagining the entire delivery model. The bank of the future will have to reimagine the norm, giving rise to transformative solutions that redefine the industry landscape.

“The banking sector is already experiencing transformation at an unprecedented pace and moving to new banking models, processes, and strategies to connect with a new generation of customers.”

They will also need a technology architecture and framework that is composable and componentized. In other words, banks need a technology infrastructure that has components that can be put together quickly to adapt to changes in the macro environment. It must allow the bank to change the components as the needs shift in response to market conditions. Banks will have to move away from monolithic architecture as it lacks the agility and adaptability needed to survive and thrive in an ever-evolving landscape. Software-as-a-Service (SaaS) is the best option for banks looking to set up componentized architectures and rolling out innovative offerings quickly and at scale.

The bank of the future will also need to be able to orchestrate and manage multi-partner ecosystems and collect and analyze data from across this ecosystem and across touchpoints. And they will need to be able to quickly devise, roll out, and manage innovative, hyper-personalized offerings that will address their customer’s unique requirements. SaaS-based platforms will help them manage a complex ecosystem seamlessly. A robust technology platform can not only manage and monetize the ecosystem but also deliver innovative and hyper-personalized products and services quickly and effectively.

Technology + Empathy + Human Centric Design = The Future of the Banking Sector

Technology is of course a crucial factor that will power these ecosystems, but banks cannot overlook the human factor entirely. Empathy-driven experiences will remain important for banks to engage meaningfully with customers. While automation and advanced data analytics are crucial for improving efficiency and delivering data-driven insights, human intelligence collected via customer interactions will be of equal importance. Human-centric UX design, people-driven intervention, and engagement combined with technology-powered innovation will be fundamental for banks to become trusted advisors to their customers in a uber digitized market.

The banking sector is already experiencing transformation at an unprecedented pace and moving to new banking models, processes, and strategies to connect with a new generation of customers. The winds of change blowing over the sector today will soon materialize into a digitally innovative banking organization. But to get there, banks must invest in transforming their legacy systems with robust technology solutions that can manage the demands of an API economy, deliver data-driven insights, and roll out unique products and services quickly.

SunTec is the World’s #1 Relationship-based Pricing and Billing company. It empowers organizations to cultivate digital empathy and fortify their customer relationships using products developed on its acclaimed cloud-native and microservices-oriented platform, SunTec Xelerate. This platform is designed to ensure a resilient and forward-looking foundation for customer relationships. SunTec Xelerate platform and products help organizations own the customer experience by setting up a system-of-engagement with enhanced product management capabilities, enterprise pricing, revenue management, and partner ecosystem management.

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